6-K 1 dp83944_6k.htm FORM 6-K

FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

 

December 14, 2017

 

Commission File Number 001-16125
   
   
Advanced Semiconductor Engineering, Inc.
( Exact name of Registrant as specified in its charter)
   

26 Chin Third Road 

Nantze Export Processing Zone 

Kaoshiung, Taiwan

 Republic of China 

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F         Form 40-F     

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes          No

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

 

Not applicable

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    ADVANCED SEMICONDUCTOR
ENGINEERING, INC.
 
       
       
Date: December 14, 2017 By: /s/ Joseph Tung  
  Name:     Joseph Tung  
  Title: Chief Financial Officer  

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No. Description
   
Exhibit 99.1 Unaudited Condensed Consolidated Interim Financial Statements
Exhibit 99.2 Discussion of Interim Financial Results as of and for the Nine-Month Period Ended September 30, 2017

 

 

 

 

EXHIBIT 99.1

 

 

 

 

 

 

Advanced Semiconductor Engineering,
Inc. and Subsidiaries

 

Condensed Consolidated Financial Statements for the
Nine Months Ended September 30, 2016 and 2017

 

 

 

 

 

 

 

 

 

 

 

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

(Unaudited)

 

   December 31, 2016   
   (Retrospectively Adjusted)  September 30, 2017
ASSETS  NT$  NT$  US$ (Note 4)
          
CURRENT ASSETS         
Cash and cash equivalents (Notes 4 and 6)  $38,392,524   $38,975,077   $1,285,034 
Financial assets at fair value through profit or loss -               
   current (Notes 4 and 7)   3,069,812    3,339,900    110,119 
Available-for-sale financial assets - current (Notes 4               
   and 8)   266,696    80,239    2,646 
Trade receivables, net (Notes 4 and 9)   51,145,557    51,830,071    1,708,871 
Other receivables (Note 4)   665,480    4,703,637    155,082 
Current tax assets (Notes 4 and 25)   471,752    242,856    8,007 
Inventories (Notes 4 and 10)   21,438,062    26,771,663    882,679 
Inventories related to real estate business (Notes 4, 11               
   24 and 36)   24,187,515    10,494,092    345,997 
Other financial assets - current (Notes 4, 12 and 36)   558,686    569,419    18,774 
Other current assets   2,593,575    2,905,274    95,789 
                
Total current assets   142,789,659    139,912,228    4,612,998 
                
NON-CURRENT ASSETS               
Available-for-sale financial assets - non-current               
    (Notes 4 and 8)   1,028,338    1,111,964    36,662 
Investments accounted for using the equity               
   method (Notes 4, 5 and 13)   49,824,690    48,926,273    1,613,131 
Property, plant and equipment (Notes 4, 14, 24,               
   and 37)   143,880,241    136,981,981    4,516,386 
Investment properties (Notes 4, 15, 24 and 36)   -      8,051,721    265,471 
Goodwill (Notes 4, 5, 16 and 28)   10,490,309    10,388,715    342,523 
Other intangible assets (Notes 4, 17, 24, 28 and 35)   1,617,261    1,441,418    47,524 
Deferred tax assets (Notes 4 and 25)   4,536,924    3,954,752    130,391 
Other financial assets - non-current (Notes 4, 12 and 36)   1,320,381    1,165,254    38,419 
Long-term prepayments for lease (Note 18)   2,237,033    7,809,515    257,485 
Other non-current assets   205,740    351,836    11,600 
                
Total non-current assets   215,140,917    220,183,429    7,259,592 
                
TOTAL  $357,930,576   $360,095,657   $11,872,590 

 

 (Continued)

 

-2-

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

(Unaudited)

 

   December 31, 2016   
   (Retrospectively Adjusted)  September 30, 2017
LIABILITIES AND EQUITY  NT$  NT$  US$ (Note 4)
          
CURRENT LIABILITIES         
Short-term borrowings (Note 19)  $20,955,522   $19,638,390   $647,491 
Financial liabilities at fair value through profit or               
   loss -  current (Notes 4 and 7)   1,763,660    803,925    26,506 
Trade payables   35,803,984    41,077,069    1,354,338 
Other payables (Note 21)   21,522,034    19,389,996    639,301 
Current tax liabilities (Note 4)   6,846,350    6,060,926    199,833 
Current portion of bonds payable (Notes 4 and 20)   9,658,346    6,136,891    202,337 
Current portion of long-term borrowings (Notes 19               
    and 36)   6,567,565    6,839,993    225,519 
Other current liabilities   3,852,113    4,407,842    145,329 
                
Total current liabilities   106,969,574    104,355,032    3,440,654 
                
NON-CURRENT LIABILITIES               
Bonds payable (Notes 4 and 20)   27,341,557    16,980,485    559,858 
Long-term borrowings (Notes 19 and 36)   46,547,998    32,525,043    1,072,372 
Deferred tax liabilities (Notes 4 and 25)   4,856,549    4,900,453    161,571 
Net defined benefit liabilities (Notes 4 and 22)   4,172,253    4,061,747    133,918 
Other non-current liabilities   1,201,480    1,176,135    38,778 
                
Total non-current liabilities   84,119,837    59,643,863    1,966,497 
                
Total liabilities   191,089,411    163,998,895    5,407,151 
                
EQUITY ATTRIBUTABLE TO OWNERS OF THE               
COMPANY (Notes 4 and 23)               
Share capital               
   Ordinary shares   79,364,735    83,804,781    2,763,099 
   Shares subscribed in advance   203,305    3,450,278    113,758 
        Total share capital   79,568,040    87,255,059    2,876,857 
Capital surplus   22,266,500    40,348,725    1,330,324 
Retained earnings (Notes 13 and 28)               
    Legal reserve   14,597,032    16,765,066    552,755 
    Special reserve   3,353,938    3,353,938    110,581 
    Unappropriated earnings   44,188,554    48,020,280    1,583,260 
        Total retained earnings   62,139,524    68,139,284    2,246,596 
Accumulated other comprehensive income   (1,840,937)   (5,144,613)   (169,621)
Treasury shares   (7,292,513)   (7,292,513)   (240,439)
                
        Equity attributable to owners of the Company   154,840,614    183,305,942    6,043,717 
                
NON-CONTROLLING INTERESTS (Notes 4 and 23)   12,000,551    12,790,820    421,722 
                
Total equity   166,841,165    196,096,762    6,465,439 
                
TOTAL  $357,930,576   $360,095,657   $11,872,590 

 

The accompanying notes are an integral part of the condensed consolidated financial statements. (Concluded)

 

-3-

 

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Thousands Except Earnings Per Share)

(Unaudited)

 

   For the Nine Months Ended September 30
   2016   
   (Retrospectively      
   Adjusted)  2017
   NT$  NT$  US$ (Note 4)
          
OPERATING REVENUES (Note 4)  $197,755,474   $206,455,154   $6,806,962 
                
OPERATING COSTS (Notes 10, 24 and 28)   159,942,771    168,516,606    5,556,103 
                
GROSS PROFIT   37,812,703    37,938,548    1,250,859 
                
OPERATING EXPENSES (Notes 24 and 28)               
Selling and marketing expenses   2,610,411    2,434,644    80,272 
General and administrative expenses   8,371,727    9,290,897    306,327 
Research and development expenses   8,300,488    8,701,067    286,880 
                
        Total operating expenses   19,282,626    20,426,608    673,479 
                
OTHER OPERATING INCOME AND               
EXPENSES (Notes 14 and 24)   (704,251)   274,317    9,044 
                
PROFIT FROM OPERATIONS   17,825,826    17,786,257    586,424 
                
NON-OPERATING INCOME AND               
EXPENSES               
Other income (Note 24)   411,965    453,688    14,958 
Other gains and losses (Note 24)   734,066    5,750,612    189,602 
Finance costs (Note 24)   (1,746,585)   (1,345,502)   (44,362)
Share of profit of associates and joint               
     ventures (Notes 4, 5 and 13)   1,176,046    542,509    17,887 
                
      Total non-operating income and expenses   575,492    5,401,307    178,085 
                
PROFIT BEFORE INCOME TAX   18,401,318    23,187,564    764,509 
                
INCOME TAX EXPENSE (Notes 4, 5 and 25)   3,229,968    4,638,014    152,918 
                
PROFIT FOR THE PERIOD   15,171,350    18,549,550    611,591 

 

(Continued)

 

-4-

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Thousands Except Earnings Per Share)

(Unaudited)

  

   For the Nine Months Ended September 30
   2016   
   (Retrospectively      
   Adjusted)  2017
   NT$  NT$  US$ (Note 4)
OTHER COMPREHENSIVE INCOME (LOSS)         
Items that may be reclassified         
subsequently to profit or loss:         
Exchange differences on translating         
foreign operations  $(6,743,531)  $(4,179,480)  $(137,800)
Unrealized gain (loss) on available- for-sale               
financial assets   (52,969)   183,026    6,035 
Share of other comprehensive income (loss) of               
associates and joint ventures accounted               
for using the equity method   (535,044)   426,703    14,068 
    (7,331,544)   (3,569,751)   (117,697)
                
TOTAL COMPREHENSIVE INCOME               
FOR THE PERIOD  $7,839,806   $14,979,799   $493,894 
                
NET PROFIT ATTRIBUTABLE TO:               
Owners of the Company  $14,339,729   $17,414,958   $574,183 
Non-controlling interests   831,621    1,134,592    37,408 
                
   $15,171,350   $18,549,550   $611,591 
                
TOTAL COMPREHENSIVE INCOME               
ATTRIBUTABLE TO:               
Owners of the Company  $7,602,650   $14,111,282   $465,258 
Non-controlling interests   237,156    868,517    28,636 
                
   $7,839,806   $14,979,799   $493,894 
                
EARNINGS PER SHARE (Note 26)               
Basic  $1.87   $2.16   $0.07 
Diluted  $1.58   $1.98   $0.07 
                
EARNINGS PER AMERICAN               
DEPOSITARY SHARE (“ADS”)               
Basic  $9.36   $10.81   $0.36 
Diluted  $7.88   $9.88   $0.33 

 

The accompanying notes are an integral part of the condensed consolidated financial statements. (Concluded)

 

-5-

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in Thousands)

(Unaudited)

 

  Equity Attributable to Owners of the Company    
                Other Equity        
                Unrealized          
                Exchange
Differences
Gain
(loss) on
         
  Share Capital   Retained Earnings on Available-for-          
    Translating sale       Non-  
  (In
Thousands)
Amounts Capital
Surplus
Legal
Reserve
Special
Reserve
Unappropriated
Earnings
Total Foreign
Operations
Financial
Assets
Total Treasury
Shares
Total controlling
Interests
Total Equity
                             
ADJUSTED BALANCE AT JANUARY 1                            
2016 (Note 13)   7,910,428   $ 79,185,660   $ 23,758,550   $ 12,649,145   $ 3,353,938   $ 37,696,865   $ 53,699,948   $ 4,492,671   $ 588,119   $ 5,080,790   $ (7,292,513 ) $ 154,432,435   $ 11,492,545   $ 165,924,980  
                                                                                     
Change in capital surplus from investments in                                                                                    
associates and joint ventures accounted for using the                                                                                    
equity method   -       -       8,283     -       -       -       -       -       -       -       -       8,283     -       8,283  
                                                                                     
Profit for the nine months ended September 30, 2016                                                                                    
(After retrospectively adjusted) (Notes 13 and 28)   -       -       -       -       -       14,339,729     14,339,729     -       -       -       -       14,339,729     831,621     15,171,350  
                                                                                     
Other comprehensive loss for the nine                                                                                    
months ended September 30, 2016, net of income tax   -       -       -       -       -       -       -       (6,448,846 )   (288,233 )   (6,737,079 )   -       (6,737,079 )   (594,465 )   (7,331,544 )
                                                                                     
Total comprehensive income (loss) for the nine                                                                                    
months ended September 30, 2016                                                                                    
(After retrospectively adjusted)   -       -       -       -       -       14,339,729     14,339,729     (6,448,846 )   (288,233 )   (6,737,079 )   -       7,602,650     237,156     7,839,806  
                                                                                     
Appropriation of 2015 earnings                                                                                    
Legal reserve   -       -       -       1,947,887     -       (1,947,887 )   -       -       -       -       -       -       -       -    
Cash dividends declared by the Company   -       -       -       -       -       (12,476,779 )   (12,476,779 )   -       -       -       -       (12,476,779 )   -       (12,476,779 )
                                                                                     
    -       -       -       1,947,887     -       (14,424,666 )   (12,476,779 )   -       -       -       -       (12,476,779 )   -       (12,476,779 )
                                                                                     
Issue of dividends received by subsidiaries from the                                                                                    
Company   -       -       233,013     -       -       -       -       -       -       -       -       233,013     -       233,013  
                                                                                     
Partial disposal of interest in subsidiaries and additional                                                                                    
acquisition of majority-owned subsidiaries (Note 30)   -       -       (20,552 )   -       -       (5,884 )   (5,884 )   -       -       -       -       (26,436 )   26,436     -    
                                                                                     
Changes in percentage of ownership interest in                                                                                    
subsidiaries (Note 30)   -       -       (1,912,887 )   -       -       -       -       -       -       -       -       (1,912,887 )   (912,886 )   (2,825,773 )
                                                                                     
Issue of ordinary shares under employee share options   26,262     323,390     396,996     -       -       -       -       -       -       -       -       720,386     -       720,386  
                                                                                     
Non-controlling interest arising from acquisition of                                                                                    
subsidiaries (After retrospectively adjusted) (Note 28)   -       -       -       -       -       -       -       -       -       -       -       -       42,857     42,857  
                                                                                     
Cash dividends distributed by subsidiaries   -       -       -       -       -       -       -       -       -       -       -       -       (236,426 )   (236,426 )
                                                                                     
Additional non-controlling interest arising on issue of                                                                                    
employee share options by subsidiaries   -       -       -       -       -       -       -       -       -       -       -       -       425,523     425,523  
                                                                                     
ADJUSTED BALANCE AT SEPTEMBER 30, 2016   7,936,690   $ 79,509,050   $ 22,463,403   $ 14,597,032   $ 3,353,938   $ 37,606,044   $ 55,557,014   $ (1,956,175 ) $ 299,886   $ (1,656,289 ) $ (7,292,513 ) $ 148,580,665   $ 11,075,205   $ 159,655,870  
                                                                                     
ADJUSTED BALANCE AT JANUARY 1, 2017 (Notes 13 and 28)   7,946,184   $ 79,568,040   $ 22,266,500   $ 14,597,032   $ 3,353,938   $ 44,188,554   $ 62,139,524   $ (1,643,623 ) $ (197,314 ) $ (1,840,937 ) $ (7,292,513 ) $ 154,840,614   $ 12,000,551   $ 166,841,165  
                                                                                     
Change in capital surplus from investments in                                                                                    
associates and joint ventures accounted for using the                                                                                    
equity method   -       -       2,266     -       -       -             -       -       -       -       2,266     -       2,266  
                                                                                     
Profit for the nine months ended September 30, 2017 (Notes 13 and 28)   -       -       -       -       -       17,414,958     17,414,958     -       -       -       -       17,414,958     1,134,592     18,549,550  
                                                                                     
Other comprehensive income (loss) for the nine                                                                                    
months ended September 30, 2017, net of income tax   -       -       -       -       -       -       -       (4,032,189 )   728,513     (3,303,676 )   -       (3,303,676 )   (266,075 )   (3,569,751 )
                                                                                     
Total comprehensive income (loss) for the nine months                                                                                    
ended September 30, 2017   -       -       -       -       -       17,414,958     17,414,958     (4,032,189 )   728,513     (3,303,676 )   -       14,111,282     868,517     14,979,799  

 

(Continued)

 

-6-

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in Thousands)

(Unaudited)

 

  Equity Attributable to Owners of the Company    
                Other Equity        
                Unrealized Gain          
                Exchange
Differences
(loss)
on
         
  Share Capital   Retained Earnings on Available-for-          
  Shares           Translating sale       Non-  
  (In
Thousands)
Amounts Capital
Surplus
Legal
Reserve
Special
Reserve
Unappropriated
Earnings
Total Foreign
Operations
Financial
Assets
Total Treasury
Shares
Total controlling
Interests
Total Equity
                             
                             
Appropriation of 2016 earnings                            
Legal reserve   -     $ -     $ -     $ 2,168,034   $ -     $ (2,168,034 ) $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -    
Cash dividends declared by the Company   -       -       -       -       -       (11,415,198 )   (11,415,198 )   -       -       -       -       (11,415,198 )   -       (11,415,198)  
                                                                                     
    -       -       -       2,168,034     -       (13,583,232 )   (11,415,198 )   -       -       -       -       (11,415,198 )   -       (11,415,198)  
                                                                                     
Issue of ordinary shares for capital increase                                                                                    
by cash (Note 23)   300,000     3,000,000     7,290,000     -       -       -       -       -       -       -       -       10,290,000     -       10,290,000  
                                                                                     
Issue of ordinary shares under conversion of bonds                                                                                    
(Notes 20 and 23)   424,258     4,242,577     9,657,905     -       -       -       -       -       -       -       -       13,900,482     -       13,900,482  
                                                                                     
Issue of dividends received by subsidiaries from the                                                                                    
Company   -       -       200,977     -       -       -       -       -       -       -       -       200,977     -       200,977  
                                                                                     
Changes in percentage of ownership interest in                                                                                    
subsidiaries (Note 30)   -       -       3,055     -       -       -       -       -       -       -       -       3,055     (3,055 )   -    
                                                                                     
Issue of ordinary shares under employee share options   55,064     444,442     928,022     -       -       -       -       -       -       -       -       1,372,464     -       1,372,464  
                                                                                     
Cash dividends distributed by subsidiaries   -       -       -       -       -       -       -       -       -       -       -       -       (246,440 )   (246,440)  
                                                                                     
Additional non-controlling interest arising on issue                                                                                    
of employee share options by subsidiaries   -       -       -       -       -       -       -       -       -       -       -       -       171,247     171,247  
                                                                                     
BALANCE AT SETPEMBER 30, 2017   8,725,506   $ 87,255,059   $ 40,348,725   $ 16,765,066   $ 3,353,938   $ 48,020,280   $ 68,139,284   $ (5,675,812 ) $ 531,199   $ (5,144,613 ) $ (7,292,513 ) $ 183,305,942   $ 12,790,820   $ 196,096,762  
                                                                                     
US DOLLARS (Note 4)                                                                                    
BALANCE AT SEPTEMBER 30, 2017       $ 2,876,857   $ 1,330,324   $ 552,755   $ 110,581   $ 1,583,260   $ 2,246,596   $ (187,135 ) $ 17,514   $ (169,621 ) $ (240,439 ) $ 6,043,717   $ 421,722   $ 6,465,439  

  

The accompanying notes are an integral part of the condensed consolidated financial statements. (Concluded)

 

-7-

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(Unaudited)

 

   For the Nine Months Ended September 30
   2016   
   (Retrospectively      
   Adjusted)  2017
   NT$  NT$  US$ (Note 4)
          
CASH FLOWS FROM OPERATING         
ACTIVITIES         
Profit before income tax  $18,401,318   $23,187,564   $764,509 
Adjustments for:               
Depreciation expense   21,694,771    21,440,178    706,897 
Amortization expense   389,363    344,151    11,347 
Net loss on fair value change of financial assets               
    and liabilities at fair value through profit or loss   1,492,157    2,567,033    84,637 
Finance costs   1,746,585    1,345,502    44,362 
Interest income   (171,615)   (178,027)   (5,870)
Dividend income   (20,625)   (47,225)   (1,557)
Compensation cost of employee share options   353,676    397,659    13,111 
Share of profit of associates and joint ventures   (1,176,046)   (542,509)   (17,887)
Gain on disposal of property, plant and equipment   (19,284)   (354,871)   (11,700)
Impairment loss recognized on financial assets   1,886    99,239    3,272 
Reversal of impairment loss on financial assets   (27,664)   -      -   
Impairment loss recognized on non- financial assets   1,199,970    560,383    18,476 
Gain on disposal of subsidiaries   -      (5,643,773)   (186,079)
Net gain on foreign currency exchange   (1,333,438)   (1,752,759)   (57,790)
Others   512,775    648,472    21,381 
Changes in operating assets and liabilities               
Financial assets held for trading   2,708,652    1,288,958    42,498 
Trade receivables   (7,049,447)   (717,617)   (23,660)
Other receivables   (189,591)   (520,774)   (17,170)
Inventories   1,077,286    (5,973,621)   (196,954)
Other current assets   (179,052)   (501,124)   (16,522)
Financial liabilities held for trading   (2,044,739)   (3,081,176)   (101,588)
Trade payables   3,717,681    5,273,085    173,857 
Other payables   (172,266)   (908,573)   (29,956)
Advance real estate receipts   (2,172,833)   (49,878)   (1,645)
Other current liabilities   239,510    401,087    13,224 
Other operating activities items   38,013    (161,830)   (5,336)
    39,017,043    37,119,554    1,223,857 
Interest received   164,867    178,833    5,896 
Dividend received   4,037,857    1,917,404    63,218 
Interest paid   (1,668,975)   (1,308,597)   (43,145)
Income tax paid   (4,838,659)   (4,638,195)   (152,924)
                
Net cash generated from operating activities   36,712,133    33,268,999    1,096,902 
                
CASH FLOWS FROM INVESTING               
ACTIVITIES               
Purchase of financial assets designated as at fair value               
    through profit or loss   (52,981,180)   (45,998,990)   (1,516,617)

 

(Continued)

 

-8-

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(Unaudited)

 

   For the Nine Months Ended September 30
   2016   
   (Retrospectively      
   Adjusted)  2017
   NT$  NT$  US$ (Note 4)
          
Proceeds on sale of financial assets designated as at         
    fair value through profit or loss  $54,592,483   $46,243,401   $1,524,675 
Purchase of available-for-sale financial assets   (1,192,678)   (602,648)   (19,870)
Proceeds on sale of available-for-sale  financial assets   867,336    821,445    27,084 
Cash received from return of capital by available-for-sale               
    financial assets   28,927    -      -   
Acquisition of associates and joint ventures   (15,816,463)   -      -   
Net cash outflow on acquisition of subsidiaries   (73,437)   -      -   
Net cash inflow from disposal of subsidiaries   -      3,526,755    116,279 
Payments for property, plant and equipment   (20,391,111)   (19,897,337)   (656,028)
Proceeds from disposal of property, plant and equipment   129,261    1,470,792    48,493 
Payments for intangible assets   (373,928)   (236,333)   (7,792)
Proceeds from disposal of intangible assets   5,482    34,951    1,152 
Decrease (increase) in other financial assets   (1,754,676)   144,394    4,761 
Decrease (increase) in other non-current assets   (177,245)   13,322    439 
                
Net cash used in investing activities   (37,137,229)   (14,480,248)   (477,424)
                
CASH FLOWS FROM FINANCING               
ACTIVITIES               
Net repayment of short-term borrowings   (384,911)   (631,277)   (20,814)
Repayment of short-term bills payable   (2,348,712)   -      -   
Proceeds from issue of bonds   9,000,000    8,000,000    263,765 
Repayment of bonds payable   (10,365,135)   (9,123,972)   (300,823)
Proceeds from long-term borrowings   48,963,098    31,278,466    1,031,272 
Repayment of long-term borrowings   (42,202,720)   (44,260,682)   (1,459,304)
Dividends paid   (12,243,766)   (11,214,221)   (369,740)
Proceeds from issue of ordinary shares   -      10,290,000    339,268 
Proceeds from exercise of employee share options   792,233    1,146,052    37,786 
Decrease in non-controlling interests   (3,062,199)   (246,440)   (8,125)
Other financing activities items   12,342    13,932    459 
                
Net cash used in financing activities   (11,839,770)   (14,748,142)   (486,256)
                
EFFECTS OF EXCHANGE RATE               
    CHANGES ON THE BALANCE OF               
    CASH AND CASH EQUIVALENTS   (5,324,895)   (3,458,056)   (114,015)
                
NET INCREASE (DECREASE) IN CASH AND CASH               
     EQUIVALENTS   (17,589,761)   582,553    19,207 
                
CASH AND CASH EQUIVALENTS AT THE BEGINNING               
     OF THE PERIOD   55,251,181    38,392,524    1,265,827 
                
CASH AND CASH EQUIVALENTS AT THE END OF               
      THE PERIOD  $37,661,420   $38,975,077   $1,285,034 

 

The accompanying notes are an integral part of the condensed consolidated financial statements. (Concluded)

  

-9-

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2017

(Amounts in Thousands, Unless Stated Otherwise)

(Unaudited)

 

1.GENERAL INFORMATION

 

Advanced Semiconductor Engineering, Inc. (the “Company”), a corporation incorporated under the laws of Republic of China (the “ROC”), and its subsidiaries (collectively referred to as the “Group”) offer a comprehensive range of semiconductors packaging, testing, and electronic manufacturing services (“EMS”).

 

The Company’s ordinary shares are listed on the Taiwan Stock Exchange (the “TSE”) under the symbol “2311”. Since September 2000, the ordinary shares of the Company have been traded on the New York Stock Exchange (the “NYSE”) under the symbol “ASX” in the form of American Depositary Shares (“ADS”). The ordinary shares of its subsidiary, Universal Scientific Industrial (Shanghai) Co., Ltd (the “USISH”), are listed on the Shanghai Stock Exchange (the “SSE”) under the symbol “601231”.

 

The consolidated financial statements are presented in the Company’s functional currency, New Taiwan dollar (NT$).

 

2.APPROVAL OF FINANCIAL STATEMENTS

 

The condensed consolidated financial statements were authorized for issue by the management on December 14, 2017.

 

3.APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (“IASB”) (collectively, “IFRSs”)

 

a.Amendments to IFRSs that are mandatorily effective for the current year

 

In the current year, the Group has applied the following new, revised or amended standards and interpretations that have been issued and effective:

 

New, Revised or Amended Standards and Interpretations   Effective Date Issued by IASB (Note 1)
         
Amendments to IFRSs   Annual Improvements to IFRSs: 2014-2016 Cycle   Note 2
Amendments to IAS 7   Disclosure Initiative   January 1, 2017
Amendments to IAS 12   Recognition of Deferred Tax Assets for Unrealized Losses   January 1, 2017

 

Note 1:The aforementioned new, revised or amended standards and interpretations are effective for annual period beginning on or after the effective dates, unless specified otherwise.

 

Note 2 :The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.

 

-10-

Except the adoption of Amendments to IAS 7 which can be referred to Note 34e, the Group believes that the adoption of the aforementioned new, revised or amended standards and interpretations did not have a material effect on the Group’s accounting policies.

 

b.New, revised or amended standards and interpretations in issue but not yet effective

 

The Group has not applied the following new, revised or amended standards and interpretations that have been issued but are not yet effective:

 

New, Revised or Amended Standards and Interpretations   Effective Date Issued by IASB (Note)
         
Amendments to IFRS 2   Classification and Measurement of Share-based Payment Transactions   January 1, 2018
IFRS 9   Financial Instruments   January 1, 2018
Amendments to IFRS 9 and IFRS 7   Mandatory Effective Date of IFRS 9 and Transition Disclosures   January 1, 2018
Amendments to IFRS 10 and IAS 28   Sale or Contribution of Assets between an Investor and its Associate or Joint Venture   To be determined by the IASB
IFRS 15   Revenue from Contracts with Customers   January 1, 2018
Amendments to IFRS 15   Clarifications to IFRS 15   January 1, 2018
IFRS 16   Leases   January 1, 2019
Amendments to IAS 40   Transfers of investment property   January 1, 2018
IFRIC 22   Foreign Currency Transactions and Advance Consideration   January 1, 2018
Amendments to IAS 28   Long-term Interests in Associate and Joint Venture   January 1, 2019
IFRIC 23   Uncertainty over Income Tax Treatments   January 1, 2019

 

Note:The aforementioned new, revised or amended standards and interpretations are effective for annual period beginning on or after the effective dates, unless specified otherwise.

 

c.Significant changes in accounting policy resulted from new, revised and amended standards and interpretations in issue but not yet effective

 

Except for the following, the Group believes that the adoption of the aforementioned new, revised or amended standards and interpretations will not have a material effect on the Group’s accounting policies. As of the date that the accompanying condensed consolidated financial statements were authorized for issue, the Group continues in evaluating the impact on its financial position and operating results as a result of the initial adoption of the below standards and interpretations. The related impact will be disclosed when the Group completes the evaluation.

 

IFRS 9 “Financial Instruments” and related amendments

 

Recognition, measurement and impairment of financial assets

 

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below:

 

For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

 

-11-

1)For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;

 

2)For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

 

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gains or losses previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

 

The impairment of financial assets

 

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, investment in debt instruments measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

 

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

 

Hedge accounting

 

The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging cost of derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item.

 

Transition

 

Financial instruments that have been derecognized prior to the effective date of IFRS 9 cannot be reversed to apply IFRS 9 when it becomes effective. Under IFRS 9, the requirements for classification, measurement and impairment of financial assets are applied retrospectively with the difference between the previous carrying amount and the carrying amount at the date of initial application recognized in the current period and restatement of prior periods is not required. The

 

-12-

requirements for general hedge accounting shall be applied prospectively and the accounting for hedging options shall be applied retrospectively.

 

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

 

The amendments stipulated that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Group loses control over a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

 

Conversely, when the Group sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate or joint venture, i.e. the Group’s share of the gain or loss is eliminated. Also, when the Group loses control over a subsidiary that does not contain a business but retains significant influence or joint control in an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate or joint venture, i.e. the Group’s share of the gain or loss is eliminated.

 

IFRS 15 “Revenue from Contracts with Customers” and related amendments

 

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations.

 

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

 

Identify the contract with the customer;

 

Identify the performance obligations in the contract;

 

Determine the transaction price;

 

Allocate the transaction price to the performance obligations in the contracts; and

 

Recognize revenue when the Group satisfies a performance obligation.

 

The Group will adopt IFRS 15 and related amendments starting from January 1, 2018, including retrospective application to all contracts that are not yet complete as of January 1, 2018, and anticipate to apply the modified retrospective transition method.  Under the modified retrospective transition method, the Group will recognize the cumulative effect of applying IFRS 15 and related amendments as an adjustment to the opening balance of retained earnings as at the date of initial application.  The comparative financial statements of prior periods will be retained as reported under the previous standards.

Presented below is the status of the process we have utilized for the adoption of IFRS 15 and related amendments and the significant implementation matters addressed:

 

The Group established a global cross-functional project management implementation team to assess all potential impacts of this standard.

 

The Group is reviewing current accounting policies and practices in each reporting segment to identify potential differences that would result from the application of this standard.


Customers and contracts were identified.

 

Evaluation of the contract provisions and the comparison of historical accounting policies and practices to the requirements of the new standard is in process, including the related qualitative disclosures regarding the potential impact of the effects of the accounting policies we expect to apply and a comparison to our current revenue recognition policies.  We expect to complete this process prior to December 31, 2017.


While the evaluation of the impact is still in process, based on our preliminary evaluation, IFRS 15 and related amendments may result in a change to the timing of revenue recognition; however, such change is not expected to have a material quantitative impact on the Group’s consolidated financial statements.

IFRS 16 “Leases”

 

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

 

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest

 

-13-

expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities.

 

The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor.

 

When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

 

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

a.Statement of Compliance

 

The condensed consolidated financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated financial statements are not subject to qualification relating to the application of IFRSs.

 

The consolidated financial statements are condensed as they do not include all of the information required for a complete set of annual financial statements, and they should be read in conjunction with the Group’s annual audited consolidated financial statements and related notes thereto for the year ended December 31, 2016 prepared in accordance with IFRSs.

 

b.Basis of Consolidation

 

The basis for the condensed consolidated financial statements

 

The basis applied in these condensed consolidated financial statements is consistent with those applied in the consolidated financial statements for the year ended December 31, 2016.

 

The subsidiaries in the condensed consolidated financial statements

 

Subsidiaries included in the condensed consolidated financial statements were as follows:

 

            Percentage of Ownership (%)
Name of Investee   Main Businesses  

Establishment and

Operating Location

  December 31, 2016   September 30, 2017
                 
A.S.E. Holding Limited   Holding company   Bermuda   100.0   100.0
J & R Holding Limited (“J&R Holding”)   Holding company   Bermuda   100.0   100.0
Innosource Limited   Holding company   British Virgin Islands   100.0   100.0
Omniquest Industrial Limited   Holding company   British Virgin Islands   100.0   100.0
ASE Marketing & Service Japan Co., Ltd.   Engaged in marketing and sales services   Japan   100.0   100.0
ASE Test, Inc.   Engaged in the testing of semiconductors   Kaohsiung, ROC   100.0   100.0
USI Inc. (“USIINC”)   Engaged in investing activity   Nantou, ROC   99.2   99.2
Luchu Development Corporation   Engaged in the development of real estate properties   Taipei, ROC   86.1   86.1
TLJ Intertech Inc. (“TLJ”)   Engaged in information software services   Taipei, ROC   60.0   60.0
Alto Enterprises Limited   Holding company   British Virgin Islands   100.0   100.0
Super Zone Holdings Limited   Holding company   Hong Kong   100.0   100.0

(Continued)

 

-14-

            Percentage of Ownership (%)
Name of Investee   Main Businesses  

Establishment and

Operating Location

  December 31, 2016   September 30, 2017
                 
ASE (Kun Shan) Inc.   Engaged in the packaging and testing of semiconductors   Kun Shan, China   100.0   100.0
ASE Investment (Kun Shan) Limited   Holding company   Kun Shan, China   100.0   100.0
Advanced Semiconductor Engineering (China) Ltd.   Will engage in the packaging and testing of semiconductors   Shanghai, China   100.0   100.0
ASE Investment (Labuan) Inc.   Holding company   Malaysia   100.0   100.0
ASE Test Limited (“ASE Test”)   Holding company   Singapore   100.0   100.0
ASE (Korea) Inc.   Engaged in the packaging and testing of semiconductors   Korea   100.0   100.0
J&R Industrial Inc.   Engaged in leasing equipment and investing activity   Kaohsiung, ROC   100.0   100.0
ASE Japan Co., Ltd.   Engaged in the packaging and testing of semiconductors   Japan   100.0   100.0
ASE (U.S.) Inc.   After-sales service and sales support   U.S.A.   100.0   100.0
Global Advanced Packaging Technology Limited   Holding company   British Cayman Islands   100.0   100.0
ASE WeiHai Inc.   Engaged in the packaging and testing of semiconductors   Shandong, China   100.0   100.0
Suzhou ASEN Semiconductors Co., Ltd. (“ASEN”)   Engaged in the packaging and testing of semiconductors   Suzhou, China   60.0   60.0
Anstock Limited   Engaged in financing activity   British Cayman Islands   100.0   100.0
Anstock II Limited   Engaged in financing activity   British Cayman Islands   100.0   100.0
ASE Module (Shanghai) Inc.   Absorbed by ASE (Shanghai) Inc. in February 2017   Shanghai, China   100.0   -
ASE (Shanghai) Inc.   Engaged in the production of substrates   Shanghai, China   100.0   100.0
ASE Corporation   Holding company   British Cayman Islands   100.0   100.0
ASE Mauritius Inc.   Holding company   Mauritius   100.0   100.0
ASE Labuan Inc.   Holding company   Malaysia   100.0   100.0
Shanghai Ding Hui Real Estate Development Co., Ltd.   Engaged in the development, construction and sale of real estate properties   Shanghai, China   100.0   100.0
Shanghai Ding Qi Property Management Co., Ltd.   Engaged in the management of real estate properties   Shanghai, China   100.0   100.0
Advanced Semiconductor Engineering (HK) Limited   Engaged in the trading of substrates   Hong Kong   100.0   100.0
Shanghai Ding Wei Real Estate Development Co., Ltd.   Engaged in the development, construction and leasing of real estate properties   Shanghai, China   100.0   100.0
Shanghai Ding Yu Real Estate Development Co., Ltd.   Engaged in the development, construction and leasing of real estate properties   Shanghai, China   100.0   100.0
Shanghai Ding Fan Department Store Co., Ltd.   Engaged in department store business   Shanghai, China   100.0   100.0
Kun Shan Ding Yue Real Estate Development Co., Ltd. (“KSDY”)   Engaged in the development, construction and leasing of real estate properties and was disposed of in June 2017 (Note 29)   Kun Shan, China   100.0   -
Kun Shan Ding Hong Real Estate Development Co., Ltd.   Engaged in the development, construction and leasing of real estate properties   Kun Shan, China   100.0   100.0
Shanghai Ding Xu Property management Co., Ltd.   Engaged in the management of real estate properties, and was established in August 2017   Shanghai, China   -   100.0
ASE Electronics Inc.   Engaged in the production of substrates   Kaohsiung, ROC   100.0   100.0
ASE Test Holdings, Ltd.   Holding company   British Cayman Islands   100.0   100.0
ASE Holdings (Singapore) Pte. Ltd   Holding company   Singapore   100.0   100.0
ASE Singapore Pte. Ltd.   Engaged in the packaging and testing of semiconductors   Singapore   100.0   100.0
ISE Labs, Inc.   Engaged in the testing of semiconductors   U.S.A.   100.0   100.0
ASE Electronics (M) Sdn. Bhd.   Engaged in the packaging and testing of semiconductors   Malaysia   100.0   100.0
ASE Assembly & Test (Shanghai) Limited   Engaged in the packaging and testing of semiconductors   Shanghai, China   100.0   100.0
ASE Trading (Shanghai) Ltd.   Engaged in trading activity   Shanghai, China   100.0   100.0

(Continued)

 

-15-

            Percentage of Ownership (%)
Name of Investee   Main Businesses  

Establishment and

Operating Location

  December 31, 2016   September 30, 2017
                 
Wuxi Tongzhi Microelectronics Co., Ltd.   Engaged in the packaging and testing of semiconductors   Wuxi, China   100.0   100.0
Huntington Holdings International Co., Ltd.   Holding company   British Virgin Islands   99.2   99.2
Unitech Holdings International Co., Ltd.   Holding company   British Virgin Islands   99.2   99.2
Real Tech Holdings Limited   Holding company   British Virgin Islands   99.2   99.2
Universal ABIT Holding Co., Ltd.   In the process of liquidation   British Cayman Islands   99.2   99.2
Rising Capital Investment Limited   Holding company   British Virgin Islands   99.2   99.2
Rise Accord Limited   Holding company   British Virgin Islands   99.2   99.2
Universal Scientific Industrial (Kunshan) Co., Ltd.   Engaged in the manufacturing and sale of computer assistance system and related peripherals   Kun Shan, China   99.2   99.2
USI Enterprise Limited (“USIE”)   Engaged in the service of investment advisory and warehousing management   Hong Kong   97.0   97.0
USISH   Engaged in the designing, manufacturing and sale of electronic components   Shanghai, China   75.9   75.9
Universal Global Technology Co., Limited   Holding company   Hong Kong   75.9   75.9
Universal Global Technology (Kunshan) Co., Ltd.   Engaged in the designing and manufacturing of electronic components   Kun Shan, China   75.9   75.9
Universal Global Technology (Shanghai) Co., Ltd.   Engaged in the processing and sales of computer and communication peripherals as well as business in import and export of goods and technology   Shanghai, China   75.9   75.9
Universal Global Electronics (Shanghai) Co., Ltd.   Engaged in the sale of electronic components and telecommunications equipment   Shanghai, China   75.9   75.9
Universal Global Industrial Co., Limited   Engaged in manufacturing, trading and investing activity   Hong Kong   75.9   75.9
Universal Global Scientific Industrial Co., Ltd. (“UGTW”)   Engaged in the manufacturing of components of telecomm and cars and provision of related R&D services   Nantou, ROC   75.9   75.9
USI America Inc.   Engaged in the manufacturing and processing of motherboards and wireless network communication and provision of related technical service.   U.S.A.   75.9   75.9
Universal Scientific Industrial De Mexico S.A. De C.V.   Engaged in the assembling of motherboards and computer components   Mexico   75.9   75.9
USI Japan Co., Ltd.   Engaged in the manufacturing and sale of computer peripherals, integrated chip and other related accessories   Japan   75.9   75.9
USI Electronics (Shenzhen) Co., Ltd.   Engaged in the design, manufacturing and sale of motherboards and computer peripherals   Shenzhen, China   75.9   75.9
Universal Scientific Industrial Co., Ltd. (“USI”)   Engaged in the manufacturing, processing and sale of computers, computer peripherals and related accessories   Nantou, ROC   75.2   75.7

 

(Concluded)

 

c.Other significant accounting policies

 

Except for the following, the accounting policies applied in these condensed consolidated financial statements are consistent with those applied in the Group’s consolidated financial statements for the year ended December 31, 2016.

 

-16-

1)Investment properties

 

Investment properties are properties held to earn rentals (including property under construction for such purposes).

 

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

 

Investment properties under construction are stated at cost less accumulated depreciation and accumulated impairment loss. Cost includes professional fees and, borrowing costs eligible for capitalization. Depreciation of these assets commences when the assets are ready for their intended use.

 

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

 

2)Retirement benefits

 

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

 

3)Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

 

d.U.S. Dollar Amounts

 

A translation of the condensed consolidated financial statements into U.S. dollars is included solely for the convenience of the readers, and has been translated from New Taiwan dollar (NT$) at the exchange rate as set forth in the statistical release by the U.S. Federal Reserve Board of the United States, which was NT$30.33 to US$1.00 as of September 30, 2017. The translation should not be construed as a representation that the NT$ amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

 

5.CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

 

The same critical accounting judgments and key sources of estimation uncertainty of the consolidated financial statements have been followed in these condensed consolidated financial statements as were applied in the preparation of the Group’s consolidated financial statements for the year ended December 31, 2016.

 

-17-

6.CASH AND CASH EQUIVALENTS

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Cash on hand  $6,856   $6,356   $210 
Checking accounts and demand deposits   28,823,763    24,732,302    815,440 
Cash equivalent   9,561,905    14,236,419    469,384 
                
   $38,392,524   $38,975,077   $1,285,034 

 

Cash equivalents include time deposits that are of a short maturity of three months or less from the date of acquisitions, and are highly liquid, readily convertible to known amounts in cash and the risk of changes in values is insignificant. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investments or other purposes.

 

7.FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Financial assets designated as at FVTPL         
          
Private-placement convertible bonds  $100,583   $100,570   $3,316 
                
Financial assets held for trading               
                
Quoted shares   1,855,073    2,306,794    76,056 
Open-end mutual funds   584,945    588,118    19,391 
Swap contracts   462,339    299,677    9,881 
Forward exchange contracts   66,872    44,741    1,475 
    2,969,229    3,239,330    106,803 
                
   $3,069,812   $3,339,900   $110,119 
                
Financial liabilities held for trading               
                
Swap contracts  $422,934   $747,465   $24,644 
Forward exchange contracts   108,912    56,460    1,862 
Foreign currency option contracts   17,924    -      -   
Conversion option, redemption option and put option of convertible bonds (Note 20)   1,213,890    -      -   
                
   $1,763,660   $803,925   $26,506 

 

Private-placement convertible bonds included embedded derivative instruments which are not closely related to the host contracts and the Group designated the entire contracts as financial assets at FVTPL on initial recognition.

 

-18-

At each balance sheet date, the outstanding swap contracts not accounted for hedge accounting were as follows:

 

        Notional Amount
Currency   Maturity Period   (In Thousands)
         
December 31, 2016        
         
Sell NT$/Buy US$   2017.01-2017.12   NT$59,797,499/US$1,871,000
Sell US$/Buy CNY   2017.03   US$49,904/CNY349,800
Sell US$/Buy JPY   2017.02   US$77,153/JPY8,600,000
Sell US$/Buy NT$   2017.01   US$61,000/NT$1,958,908
         
September 30, 2017        
         
Sell EUR/Buy US$   2017.10   EUR1,885/US$2,265
Sell NT$/Buy US$   2017.10-2018.09   NT$60,432,586/US$1,997,400
Sell US$/Buy CNY   2017.10   US$53,544/CNY349,800
Sell US$/Buy JPY   2017.10-2017.11   US$75,667/JPY8,380,000
Sell US$/Buy NT$   2017.10   US$144,040/NT$4,332,087

 

At each balance sheet date, the outstanding forward exchange contracts not accounted for hedge accounting were as follow:

 

        Notional Amount
Currency   Maturity Period   (In Thousands)
         
December 31, 2016        
         
Sell NT$/Buy US$   2017.01-2017.02   NT$2,842,330/US$90,000
Sell US$/Buy CNY   2017.01-2017.02   US$70,000/CNY484,805
Sell US$/Buy JPY   2017.01-2017.02   US$43,877/JPY5,063,820
Sell US$/Buy KRW   2017.01   US$35,000/KRW41,012,700
Sell US$/Buy MYR   2017.01-2017.02   US$19,000/MYR84,544
Sell US$/Buy NT$   2017.01-2017.03   US$190,000/NT$6,099,400
Sell US$/Buy SGD   2017.01-2017.03   US$12,900/SGD18,080
Sell US$/Buy EUR   2017.01   US$281/EUR270
         
September 30, 2017        
         
Sell NT$/Buy US$   2017.10-2017.11   NT$3,296,070/US$110,000
Sell US$/Buy CNY   2017.10-2017.12   US$101,800/CNY672,969
Sell US$/Buy JPY   2017.10-2017.11   US$37,761/JPY4,163,602
Sell US$/Buy KRW   2017.10   US$5,000/KRW5,650,100
Sell US$/Buy MYR   2017.10-2017.11   US$7,000/MYR30,090
Sell US$/Buy NT$   2017.10   US$75,800/NT$2,293,351
Sell US$/Buy SGD   2017.10-2017.11   US$9,400/SGD12,734

 

At each balance sheet date, the outstanding foreign currency option contracts not accounted for hedge accounting were as follows:

 

-19-

        Notional Amount
Currency   Maturity Period   (In Thousands)
         
December 31, 2016        
         
Buy US$ Call/CNY Put   2017.08 (Note)   US$2,000/CNY13,800
Sell US$ Put/CNY Call   2017.08 (Note)   US$1,000/CNY6,900

 

Note:The contracts will be settled once a month and the counterparty has the right to early terminate the contracts, or the contracts will be early terminated or both parties will have no obligation to settle the contracts when specific criteria are met.

 

8.AVAILABLE-FOR-SALE FINANCIAL ASSETS

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Unquoted ordinary shares  $553,350   $579,223   $19,097 
Limited partnership   273,372    263,147    8,676 
Open-end mutual funds   243,458    23,175    764 
Quoted ordinary shares   146,786    261,924    8,636 
Unquoted preferred shares   78,068    64,734    2,135 
    1,295,034    1,192,203    39,308 
Current   266,696    80,239    2,646 
                
Non-current  $1,028,338   $1,111,964   $36,662 

 

9.TRADE RECEIVABLES, NET

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Trade receivables  $51,199,266   $51,916,883   $1,711,733 
Less:  Allowance for doubtful debts   53,709    86,812    2,862 
                
Trade receivables, net  $51,145,557   $51,830,071   $1,708,871 

 

a.Trade receivables

 

The Group’s average credit terms were 30 to 90 days. Allowance for doubtful debts is assessed by reference to the collectability of receivables by evaluating the account aging, historical experience and current financial condition of customers.

 

As of December 31, 2016 and September 30, 2017, except that the Group’s five largest customers accounted for 30% and 34% of accounts receivable, respectively, the concentration of credit risk is insignificant for the remaining accounts receivable.

 

-20-

Aging of receivables based on the past due date

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Not past due  $45,959,876   $47,648,820   $1,571,013 
1 to 30 days   4,467,435    3,694,261    121,802 
31 to 90 days   700,122    469,467    15,478 
More than 91 days   71,833    104,335    3,440 
                
Total  $51,199,266   $51,916,883   $1,711,733 

 

Aging of receivables that were past due but not impaired

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
1 to 30 days  $4,449,479   $3,667,348   $120,915 
31 to 90 days   596,647    328,895    10,844 
                
Total  $5,046,126   $3,996,243   $131,759 

 

Except for those impaired, the Group had not provided an allowance for doubtful debts on trade receivables at each balance sheet date since there has not been a significant change in credit quality and the amounts were still considered collectible. The Group did not hold any collateral or other credit enhancements over these balances nor did it have a legal right to offset against any amounts owed by the Group to counterparties.

 

Movement of the allowance for doubtful trade receivables

 

  

Impaired

Individually

 

Impaired

Collectively

  Total
   NT$  NT$  NT$
          
Balance at January 1, 2016  $39,046   $43,860   $82,906 
Impairment losses recognized (reversed)   (29,013)   1,349    (27,664)
Effect of foreign currency exchange difference   (691)   (289)   (980)
                
Balance at September 30, 2016  $9,342   $44,920   $54,262 
                
Balance at January 1, 2017  $16,453   $37,256   $53,709 
Impairment losses recognized   11,084    24,683    35,767 
Effect of foreign currency exchange difference   (741)   (1,923)   (2,664)
                
Balance at September 30, 2017  $26,796   $60,016   $86,812 

-21-

  

Impaired

Individually

 

Impaired

Collectively

  Total
   US$ (Note 4)  US$ (Note 4)  US$ (Note 4)
          
Balance at January 1, 2017  $543   $1,228   $1,771 
Impairment losses recognized   365    814    1,179 
Effect of foreign currency exchange difference   (25)   (63)   (88)
                
Balance at September 30, 2017  $883   $1,979   $2,862 

 

b.Transfers of financial assets

 

Except those factored receivables of US$41,849 thousand in prior years have been collected by Citi Bank during the nine months ended September 30, 2016, there was no receivables factored nor advances received for the nine months ended September 30, 2016 and 2017, respectively. The credit lines under the factoring agreements with Citi Bank were both US$66,000 thousand for the nine months ended September 30, 2016 and 2017.

 

Pursuant to the factoring agreement, losses from commercial disputes (such as sales returns and discounts) should be borne by the Company, while losses from credit risk should be borne by the banks. The Company also issued promissory notes to the banks for commercial disputes which remained undrawn since. The promissory notes both amounted to US$2,000 thousand as of December 31, 2016 and September 30, 2017. As of September 30, 2017, there was no significant losses from commercial disputes in the past and the Company does not expect any significant commercial dispute losses in the foreseeable future.

 

10.INVENTORIES

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Finished goods  $6,519,465   $7,201,767   $237,447 
Work in process   2,822,687    4,829,192    159,222 
Raw materials   10,850,062    13,147,432    433,479 
Supplies   795,093    942,167    31,064 
Raw materials and supplies in transit   450,755    651,105    21,467 
                
   $21,438,062   $26,771,663   $882,679 

 

The cost of inventories recognized as operating costs for the nine months ended September 30, 2016 and 2017 were NT$158,494,249 thousand (retrospectively adjusted) and NT$168,241,535 thousand (US$5,547,034 thousand), respectively, which included write-down of inventories at NT$313,124 thousand and NT$274,917 thousand (US$9,064 thousand), respectively.

 

-22-

11.INVENTORIES RELATED TO REAL ESTATE BUSINESS

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Land and buildings held for sale  $263,526   $110,174   $3,632 
Construction in progress   22,236,464    8,696,393    286,726 
Land held for construction   1,687,525    1,687,525    55,639 
                
   $24,187,515   $10,494,092   $345,997 

 

Land and buildings held for sale located in Kun Shan Qiandeng and Shanghai Zhangjiang, China were completed and successively sold. Construction in progress is mainly located on Hutai Road in Shanghai, China and Lidu Road in Kun Shan, China. The capitalized borrowing costs for the nine months ended September 30, 2016 and 2017 are disclosed in Note 24.

 

Construction in progress located on Caobao Road in Shanghai was completed in the third quarter of 2017 and immediately leased out for the lease business. As a result, the Group reclassified those buildings and land use right under the line item of “inventories related to real estate - construction in progress” to investment properties of NT$6,971,372 thousand (US$229,851 thousand) and long-term prepayments of NT$5,798,449 thousand (US$191,179 thousand), respectively. Please refer to Note 15.

 

As of December 31, 2016 and September 30, 2017, inventories related to real estate business of NT$12,076,154 thousand and NT$10,482,554 thousand (US$345,617 thousand), respectively, are expected to be recovered longer than twelve months.

 

Refer to Note 36 for the carrying amount of inventories related to real estate business that had been pledged by the Group to secure bank borrowings.

 

12.OTHER FINANCIAL ASSETS

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Unsecured subordinate corporate bonds  $1,000,000   $1,000,000   $32,971 
Time deposits with original maturity over three months   480,736    503,276    16,593 
Guarantee deposits   178,103    161,093    5,311 
Pledged time deposits (Note 36)   206,530    63,099    2,080 
Others (Note 36)   13,698    7,205    238 
    1,879,067    1,734,673    57,193 
Current   558,686    569,419    18,774 
                
Non-current  $1,320,381   $1,165,254   $38,419 

 

The annual interest rate of unsecured subordinate corporate bonds was both 3.50 % as of December 31, 2016 and September 30, 2017.

 

-23-

13.INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

 

  

December 31,

2016 (Retrospectively Adjusted)

  September 30, 2017
   NT$  NT$  US$ (Note 4)
          
Investments in associates  $49,154,140   $48,386,594   $1,595,337 
Investments in joint ventures   670,550    539,679    17,794 
                
   $49,824,690   $48,926,273   $1,613,131 
a.Investments in associates

 

1)Investments in associates accounted for using the equity method consisted of the following:

 

         Carrying Amount
      Operating 

December 31,

2016

(Retrospectively Adjusted)

 

September 30,

2017

Name of Associate  Main Business  Location  NT$  NT$  US$ (Note 4)
                
Material associate               
Siliconware Precision Industries Co., Ltd. (“SPIL”)  Engaged in assembly, testing and turnkey services of integrated circuits  ROC  $45,898,225   $45,291,485   $1,493,290 
Associates that are not individually material                     
Deca Technologies Inc.”DECA”  Holding company and the group engaged in manufacturing, development and marketing of wafer level packaging and interconnect technology  British Cayman Islands   1,813,677    1,641,440    54,119 
Hung Ching Development & Construction Co. (“HC”)  Engaged in the development, construction and leasing of real estate properties  ROC   1,156,833    1,218,475    40,174 
Hung Ching Kwan Co. (“HCK”)  Engaged in the leasing of real estate properties  ROC   321,120    312,567    10,305 
Advanced Microelectronic Products Inc. (“AMPI”)  Engaged in integrated circuit  ROC   264,434    222,776    7,345 
          49,454,289    48,686,743    1,605,233 
   Less: Deferred gain on transfer of land      300,149    300,149    9,896 
                      
         $49,154,140   $48,386,594   $1,595,337 

 

2)At each balance sheet date, the percentages of ownership held by the Group were as follows:

 

  

December 31,

2016

 

September 30,

2017

       
SPIL   33.29%   33.29%
DECA   22.07%   22.07%
HC   26.22%   26.22%
HCK   27.31%   27.31%
AMPI   38.76%   38.76%

 

3)In July 2016, the Company acquired 98,490 thousand preferred shares issued by DECA at US$0.608 per share with a total consideration of NT$1,934,062 thousand. The percentage of ownership was 22.07% and the Company obtained significant influence over DECA. In addition, the Company's subsidiary, ASE Test, Inc., purchased 90,000 thousand ordinary share of AMPI in a private placement with NT$225,000 thousand paid in cash in November 2016. The private-placement ordinary shares were all restricted for disposal during a 3-year lock-up period.

 

-24-

4)The Group has successively completed the identification of the difference between the cost of the investments and the Company’s share of the net fair value of DECA and AMPI’s identifiable assets and liabilities in the second quarter and the third quarter in 2017. Therefore, the Group has retrospectively adjusted the comparative consolidated financial statements for prior periods. As of December 31, 2016, the retrospective adjustments are summarized as follows:

 

   After Retrospectively Adjusted  Before Retrospectively Adjusted
   NT$  NT$
Investments accounted for using the equity method      
       
December 31, 2016      
DECA  $1,813,677   $1,820,329 
AMPI  $264,434   $266,085 

 

The aforementioned retrospective adjustments are accordingly recorded as a decrease of retained earnings as of December 31, 2016.

 

5)Fair values (Level 1 inputs in terms of IFRS 13) of investments in associates with available published price quotation are summarized as follows:

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
SPIL  $49,634,805   $50,257,185   $1,657,012 
HC  $1,310,829   $1,317,692   $43,445 
AMPI  $307,038   $556,121   $18,336 

 

 6)Summarized financial information in respect of the Group’s material associate

 

The summarized financial information below represents amounts shown in SPIL’s consolidated financial statements prepared in accordance with IFRSs and adjusted by the Group for equity accounting purposes.

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Current assets  $50,451,295   $46,610,073   $1,536,765 
Non-current assets   107,573,251    105,401,342    3,475,151 
Current liabilities   (41,088,439)   (38,262,801)   (1,261,550)
Non-current liabilities   (17,518,410)   (16,153,506)   (532,592)
                
Equity  $99,417,697   $97,595,108   $3,217,774 
                
Proportion of the Group’s ownership interest in SPIL   33.29%   33.29%   33.29%
                
Net assets attributable to the Group  $33,096,151   $32,489,411   $1,071,197 
Goodwill   12,802,074    12,802,074    422,093 
                
Carrying amount  $45,898,225   $45,291,485   $1,493,290 

-25-

   For the Nine Months Ended September 30
   2016  2017
   NT$  NT$  US$ (Note 4)
          
Operating revenue  $62,934,405   $61,931,600   $2,041,925 
Gross profit  $10,886,891   $9,066,839   $298,940 
Profit before income tax  $5,057,322   $3,503,617   $115,517 
                
Net profit for the period  $4,018,435   $2,554,429   $84,221 
Other comprehensive income(loss) for the period   (1,518,518)   1,091,109    35,975 
                
Total comprehensive income for the period  $2,499,917   $3,645,538   $120,196 
Cash dividends received from SPIL  $3,941,740   $1,815,275   $59,851 

 

7)Aggregate information of associates that are not individually material

 

   For the Nine Months Ended September 30
   2016  2017
   NT$  NT$  US$ (Note 4)
          
The Group’s share of:         
Net loss for the period  $(13,186)  $(132,933)  $(4,383)
Other comprehensive income (loss) for the period   (37,574)   44,279    1,460 
                
Total comprehensive loss for the period  $(50,760)  $(88,654)  $(2,923)

 

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income or loss of the investments in associates for the nine months ended September 30, 2016 and 2017 was based on the associates’ financial statements prepared in accordance with IFRSs and adjusted by the Group for equity method accounting purposes.

 

b.Investments in joint ventures

 

1)The joint venture that was not individually material and accounted for using the equity method was the Group’s investment in ASE Embedded Electronics Inc. (“ASEEE”). In May 2015, the Group and TDK Corporation (“TDK”) entered into an agreement to establish a joint venture to invest in ASEEE. The Group additionally participated in ASEEE’s cash capital increase with NT$146,903 thousand in September 2016. As of December 31, 2016 and September 30, 2017, the percentages of ownership were both 51%. ASEEE are located in ROC and engages in the production of embedded substrate. According to the joint arrangement, the Group and TDK must act together to direct the relevant operating activities and, as a result, the Group does not control ASEEE. The investment in ASEEE is accounted for using the equity method.

 

2)Aggregate information of the joint venture that is not individually material

 

   For the Nine Months Ended September 30
   2016  2017
   NT$  NT$  US$ (Note 4)
          
The Group’s share of net loss and total comprehensive loss for the period  $(57,252)  $(131,154)  $(4,324)

 

 

-26-

3)The investments accounted for using the equity method and the share of loss and other comprehensive loss as of and for the nine months ended September 30, 2016 and 2017, respectively, were based on the joint venture’s financial statements prepared in accordance with IFRSs and adjusted by the Group for equity method accounting purposes.

 

14.PROPERTY, PLANT AND EQUIPMENT

 

The carrying amounts of each class of property, plant and equipment were as follows:

 

  

December 31,

2016

 

September 30,

2017

   NT$  NT$  US$ (Note 4)
          
Land  $3,365,013   $3,274,238   $107,954 
Buildings and improvements   58,028,631    59,075,082    1,947,744 
Machinery and equipment   72,700,762    68,825,847    2,269,233 
Other equipment   2,089,581    1,658,113    54,670 
Construction in progress and machinery in transit   7,696,254    4,148,701    136,785 
                
   $143,880,241   $136,981,981   $4,516,386 

 

For the nine months ended September 30, 2016

 

   Land  Buildings and improvements  Machinery and equipment  Other equipment 

Construction in progress and machinery

in transit

  Total
   NT$  NT$  NT$  NT$  NT$  NT$
                   
Cost                  
                   
Balance at January 1, 2016  $3,381,300   $94,447,932   $243,283,607   $7,722,408   $6,397,760   $355,233,007 
Additions   -      (19,825)   100,380    76,145    21,128,121    21,284,821 
Disposals   -      (387,024)   (8,033,648)   (84,143)   (215,773)   (8,720,588)
Reclassification   -      3,316,244    14,388,566    594,599    (18,299,584)   (175)
Acquisitions through business combinations   -      -      -    1,159    -      1,159 
Effect of foreign currency exchange differences   (41,497)   (2,534,611)   (4,762,613)   (194,188)   (42,550)   (7,575,459)
                               
Balance at September 30, 2016  $3,339,803   $94,822,716   $244,976,292   $8,115,980   $8,967,974   $360,222,765 
                               
Accumulated depreciation and impairment                              
                               
Balance at January 1, 2016  $-     $34,646,878   $164,568,298   $5,907,414   $113,342   $205,235,932 
Depreciation expense   -      3,845,108    17,236,723    612,940    -      21,694,771 
Impairment losses recognized   -      620    876,153    5,564    4,509    886,846 
Disposals   -      (332,480)   (7,790,959)   (76,588)   (100,049)   (8,300,076)
Reclassification   -      (5,200)   2,979    2,221    -      -   
Acquisitions through business combinations   -      -      -      824    -      824 
Effect of foreign currency exchange differences   -      (1,008,288)   (3,316,339)   (177,831)   (1,929)   (4,504,387)
                               
Balance at September 30, 2016  $-     $37,146,638   $171,576,855   $6,274,544   $15,873   $215,013,910 

 

For the nine months ended September 30, 2017

 

   Land  Buildings and improvements  Machinery and equipment  Other equipment 

Construction in progress and machinery

in transit

  Total
   NT$  NT$  NT$  NT$  NT$  NT$
                   
Cost                  
                   
Balance at January 1, 2017  $3,365,013   $96,258,175   $248,200,756   $8,474,661   $7,713,542   $364,012,147 
Additions   -      293,069    78,465    78,411    18,135,298    18,585,243 
Disposals   -      (535,891)   (7,760,212)   (646,613)   (35,652)   (8,978,368)
Reclassification   (35,965)   5,899,415    15,099,085    141,871    (22,235,980)   (1,131,574)
Effect of foreign currency exchange differences   (54,810)   (2,059,053)   (4,261,996)   (167,199)   571,493    (5,971,565)
                               
Balance at September 30, 2017  $3,274,238   $99,855,715   $251,356,098   $7,881,131   $4,148,701   $366,515,883 
                               

 

(Continued)

 

-27-

   Land  Buildings and improvements  Machinery and equipment  Other equipment 

Construction in progress and machinery

in transit

  Total
   NT$  NT$  NT$  NT$  NT$  NT$
                   
Accumulated depreciation and impairment                  
                   
Balance at January 1, 2017  $-     $38,229,544   $175,499,994   $6,385,080   $17,288   $220,131,906 
Depreciation expense   -      3,866,133    16,958,075    585,491    -      21,409,699 
Impairment losses recognized   -      2,310    282,788    368    -      285,466 
Disposals   -      (419,294)   (6,839,759)   (603,097)   (17,288)   (7,879,438)
Reclassification   -      (210,046)   24,625    (14,324)   -      (199,745)
Effect of foreign currency exchange differences   -      (688,014)   (3,395,472)   (130,500)   -      (4,213,986)
                               
Balance at September 30, 2017  $-     $40,780,633   $182,530,251   $6,223,018   $-     $229,533,902 

 

(Concluded)

 

   Land  Buildings and improvements  Machinery and equipment  Other equipment 

Construction in progress and machinery

in transit

  Total
   US$ (Note 4)  US$ (Note 4)  US$ (Note 4)  US$ (Note 4)  US$ (Note 4)  US$ (Note 4)
                   
Cost                  
                   
Balance at January 1,2017  $110,947   $3,173,695   $8,183,342   $279,415   $254,320   $12,001,719 
Additions   -      9,663    2,587    2,585    597,933    612,768 
Disposals   -      (17,669)   (255,859)   (21,320)   (1,175)   (296,023)
Reclassification   (1,186)   194,508    497,827    4,677    (733,135)   (37,309)
Effect of foreign currency exchange differences   (1,807)   (67,888)   (140,521)   (5,512)   18,842    (196,886)
                               
Balance at September 30, 2017  $107,954   $3,292,309   $8,287,376   $259,845   $136,785   $12,084,269 
                               
Accumulated depreciation and impairment                              
                               
Balance at January 1, 2017  $-     $1,260,453   $5,786,350   $210,520   $570   $7,257,893 
Depreciation expense   -      127,469    559,119    19,304    -      705,892 
Impairment losses recognized   -      76    9,324    12    -      9,412 
Disposals   -      (13,824)   (225,511)   (19,885)   (570)   (259,790)
Reclassification   -      (6,925)   812    (473)   -      (6,586)
Effect of foreign currency exchange differences   -      (22,684)   (111,951)   (4,303)   -      (138,938)
                               
Balance at September 30, 2017  $-     $1,344,565   $6,018,143   $205,175   $-     $7,567,883 

 

Due to the Group’s future operation plans and capacity evaluation or production demands in segment of packaging and testing, the Group believed that a portion of property, plant and equipment does not qualify for the production needs and therefore recognized an impairment loss of NT$886,846 thousand and NT$285,466 thousand (US$9,412 thousand) under the line item of other operating income and expenses in the condensed consolidated statements of comprehensive income for the nine months ended September 30, 2016 and 2017, respectively. The recoverable amount of the impaired property, plant and equipment is determined on the basis of its value in use and the Group expects to derive zero future cash flows from these assets.

 

Each class of property, plant and equipment was depreciated on a straight-line basis over the following useful lives:

 

Buildings and improvements     
Main plant buildings    10-40 years 
Cleanrooms    10-20 years 
Others    3-20 years 
Machinery and equipment    2-10 years 
Other equipment    2-20 years 

 

The capitalized borrowing costs for the nine months ended September 30, 2016 and 2017, respectively, are disclosed in Note 24.

 

-28-

15.INVESTMENT PROPERTIES

 

   Land  Buildings and improvements  Total
   NT$  NT$  NT$
          
Cost         
          
Balance at January 1, 2017  $-     $-     $-   
Transfers from inventories related to real estate business and property, plant and equipment   35,965    8,114,110    8,150,075 
Effects of foreign currency exchange differences   -      133,158    133,158 
                
Balance at September 30, 2017  $35,965   $8,247,268   $8,283,233 
                
Accumulated depreciation and impairment               
                
Balance at January 1, 2017  $-     $-     $-   
Depreciation expenses   -      30,479    30,479 
Transfers from inventories related to real estate business and property, plant and equipment   -      199,745    199,745 
Effects of foreign currency exchange differences   -      1,288    1,288 
                
Balance at September 30, 2017  $-     $231,512   $231,512 

 

   Land  Buildings and improvements  Total
   US$ (Note 4)  US$ (Note 4)  US$ (Note 4)
          
Cost         
          
Balance at January 1, 2017  $-     $-     $-   
Transfers from inventories related to real estate business and property, plant and equipment   1,186    267,528    268,714 
Effects of foreign currency exchange differences   -      4,390    4,390 
                
Balance at September 30, 2017  $1,186   $271,918   $273,104 
                
Accumulated depreciation and impairment               
                
Balance at January 1, 2017  $-     $-     $-   
Depreciation expenses   -      1,005    1,005 
Transfers from inventories related to real estate business and property, plant and equipment   -      6,586    6,586 
Effects of foreign currency exchange differences   -      42    42 
                
Balance at September 30, 2017  $-     $7,633   $7,633 

 

The investment properties are depreciated using the straight-line method over their estimated useful lives as follows:

 

Main buildings   10-40 years 
Others   3-20 years 

 

-29-

The fair value of the investment properties was approximately NT$11,559,100 thousand (US$381,111 thousand) which was measured using level 3 inputs, the market approach and the income approach by independent professional appraisers.

 

Investment properties are held under freehold interests. Refer to Note 36 for the carrying amount of the investment properties that had been pledged by the Group to secure borrowings.

 

16.GOODWILL

 

   Cost  Accumulated impairment  Carrying amount
   NT$  NT$  NT$
          
Balance at January 1, 2016  $12,495,515   $1,988,996   $10,506,519 
Acquisitions through business combinations  (Retrospectively Adjusted) (Note 28)   15,323    -      15,323 
Effect of foreign currency exchange differences   (77,963)   -      (77,963)
                
Balance at September 30, 2016  $12,432,875   $1,988,996   $10,443,879 
                
Balance at January 1, 2017 (Retrospectively Adjusted) (Note 28)  $12,479,305   $1,988,996   $10,490,309 
Effect of foreign currency exchange differences   (101,594)   -      (101,594)
                
Balance at September 30, 2017  $12,377,711   $1,988,996   $10,388,715 

 

   Cost  Accumulated impairment  Carrying amount
   US$ (Note 4)  US$ (Note 4)  US$ (Note 4)
          
Balance at January 1, 2017 (Retrospectively Adjusted) (Note 28)  $411,452   $65,579   $345,873 
Effect of foreign currency exchange differences   (3,350)   -      (3,350)
                
Balance at September 30, 2017  $408,102   $65,579   $342,523 

 

17.OTHER INTANGIBLE ASSETS

 

The carrying amounts of each class of other intangible assets were as follows:

 

  

December 31,

2016

(Retrospectively Adjusted)

 

September 30,

2017 

   NT$  NT$  US$ (Note 4)
          
Customer relationships (Note 28)  $194,089   $133,854   $4,413 
Computer software   943,527    845,973    27,892 
Patents and acquired specific technology (Note 28)   359,227    329,266    10,856 
Others   120,418    132,325    4,363 
                
   $1,617,261   $1,441,418   $47,524 

 

-30-

 

For the nine months ended September 30, 2016 (Retrospectively Adjusted)

 

   Customer relationships  Computer software  Patents and acquired specific technology  Others  Total
   NT$  NT$  NT$  NT$  NT$
                
Cost               
                
Balance at January 1, 2016  $915,636   $3,338,360   $154,082   $193,338   $4,601,416 
Additions   -      282,739    403,543    1,246    687,528 
Disposals or derecognization   (41,099)   (36,542)   (30)   -      (77,671)
Acquisitions through business combinations   41,099    -      64,380    30    105,509 
Effect of foreign currency exchange differences   -      (65,196)   (4,318)   (2,327)   (71,841)
                          
Balance at September 30, 2016  $915,636   $3,519,361   $617,657   $192,287   $5,244,941 
                          
Accumulated amortization